BHS appreciates the opportunity to comment on this important regulation. We strongly urge the
Departments to act promptly to resolve outstanding questions and ambiguities, and issue the final
regulation, If the final regulation is not issued well before January 2011, most plans will have the
burden of facing yet another plan year of attempting to make “reasonable interpretations” of
MHPAEA and its interim final regulation, leaving the plans open to potential beneficiary legal
actions if the plans’ interpretations are ultimately not allowed by the final regulation.

Sincerely,

Wa
NUL. Bred
Patricia L. Friedley
Executive Vice President & Chief Quality Officer


« A benefit penalty of a loss of benefits for a particular level of care to discourage patient
non-compliance.

By not allowing the plan to limit the number of treatment episodes, the interim final rule forces
the employer to terminate a non-compliant employee in order to contain plan costs, and requires
the plan to pay multiple episodes of treatment for non-compliant dependents whose coverage
cannot be terminated.

This nonquantitative treatment limitation is causing many BHS clients to consider eliminating
substance abuse benefits. It also interferes with the employer’s drug-free workplace policies.

Separate but Equal
Plans must be allowed to maintain separate but equal deductibles and out-of-pocket

maximums. The Departments acknowledge that the MHPAEA language can be interpreted to
support both allowing separate but equal deductibles and out-of-pocket maximums and requiring
integrated deductibles and out-of-pocket maximums. In prohibiting the separate but equal
viewpoint, the Departments considered potential costs to complete the necessary interfaces at
$35,000 or more per interface. “A low-end estimate of the first year cost for MBHOs and
insurers to create, on average, at least 20 new interfaces would be $700,000 per insurer.” Let us
assure the Departments that while large national MBHOs may have these funds, for BHS and
similar smaller companies this amount is prohibitive. The situation is further complicated by the
reluctance of medical/surgical plan administrators, in an effort to force self-insured employers to
terminate their behavioral carve-outs, to complete any interfaces or supply any necessary
information to the carve-outs. If the employer is forced to “carve-in” behavioral benefits to the
medical/surgical plan administrator, the employer loses all the advantages (experienced
administration, specialty provider network, negotiated rates, etc.) of the behavioral carve-out.

One BHS client, intent on keeping patients financially involved with their treatments, has already
stated that if it cannot have a separate but equal deductible, it will eliminate all mental health and
substance use disorder benefits from its health plan. Again, this penalizes the employer/members
who do not have access to mental health-related treatment.

Scope of Services/Continuum of Care
The Departments must clarify their positions on scope of services/continuum of care. In the

Overview, the Departments acknowledge that the regulations do not address the scope of services
and that not all treatments or treatment settings (i.e., counseling or residential treatment) for
mental health or substance use disorders correspond to those for medical/surgical treatment. This
acknowledgement gives the impression that the plan need not extend parity to mental health
services which have no corresponding medical/surgical service.

On the other hand, the interim final regulation establishes six benefit classifications into which all
services must be classified. This gives the impression that any behavioral covered service must
be. covered at parity to the medical/surgical benefits in that classification, regardless of whether
there are corresponding medical/surgical services. Clarification is needed.

BHS supports the Departments’ allowing the plan to define which services fall into each of the
six benefit classifications.


NBHS.

BEHAVIORAL HEALTH SYSTEMS

Behavioral Healthcare Programs for Business & Industry Since 1989

May 3, 2009

Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-4140-IFC

P.O. Box 8016

Baltimore, MD 21244-1850

Re: Comments on Interim Final Regulation
Mental Health Parity and Addiction Equity Act of 2008

Dear Sirs:

Behavioral Health Systems (BHS) was formed in 1989 as a privately held Alabama corporation.
We created and administer a preferred provider organization (PPO) of mental health-related
hospitals, physicians and professionals. BHS markets this PPO to large, private employers under
a “carve-out” arrangement, through which BHS administers their employees’ mental
health/substance abuse benefits. BHS staff oversees the care provided through this network, and
processes all claims between the employer client and BHS providers.

BHS is an open-model PPO which contracts with a broad network of specialty providers on a
negotiated fee-for-service basis. This ensures maximum freedom of choice, and the ability of
BHS to handle any size member volume.

BHS offers the lowest cost structure possible for mental health and substance abuse benefits on a
fee-for-service rate basis, with no risk borne by BHS, This ensures maximum cost savings accrue
directly to the client, that they have full knowledge of cost and utilization, and that client
preferences regarding plan design/coverage limits are easily accommodated.

Employers currently participating in the BHS managed care/EAP programs have realized a
savings in the 25 — 50% range, while at the same time increasing benefits to their employees over
the previously administered plan.

BHS has the sole endorsement of the Employers Coalition for Healthcare Options (Alabama), the
Associated Builders and Contractors of Alabama, and the Louisiana Business Group on Health as
the endorsed mental/nervous provider on behalf of their memberships, and maintained a similar
endorsement from the Alabama Healthcare Council during its existence.

BHS represents 500 clients, 502,000+ covered lives, and 11,000+ providers across the nation.
The opinions expressed below are not only BHS’ opinion. We have thoroughly discussed
MHPAEA and the interim final regulation with all BHS clients, and this represents the opinion of
the BHS client base.

‘Two Metroptex Drive, Suite 500 + Birmingham, AL 35209 ¢ 205-879-1150 * 800-245-1150 Fax 205-879-1178  www.behavioralhealthsystems.com

Employee Assistance Programs ¢ Managed Care Programs ¢ Safety First Drug Testing * Education & Training «
Wellness & Disease Management * Behavioral Comp Management


Nonquantitative Treatment Limitations

We ask that the Departments eliminate the nonquantitative treatment limitations from the
final regulation. The implications of the nonquantitative treatment limitations will cause plan
costs to exceed those originally projected and more employers will opt out of mental health parity
due to costs or entirely eliminate mental health and substance use disorder benefits from their
plans, to the detriment of the employers/members.

BHS believes the nonquantitative treatment limitations introduced a new concept into mental
health parity that is not in the MHPAEA statutory language. This impression is shared by many
within the behavioral health field. Persons involved have indicated that nonquantitative
limitations were not the intent during the legislation drafting process, and that such limitations are
not specifically provided for in the statutory language. The statutory examples are only
quantitative.

MHPAEA provides that financial requirements and treatment limitations for mental health and/or
substance abuse disorder benefits cannot be more restrictive than the predominant financial
requirement or treatment limitation applied to substantially all medical/surgical benefits.
However, in introducing nonquantitative treatment limitations, the interim final rule developed a
new method for establishing parity, i.c., that such limitations “be comparable to, and applied no
more stringently than” the limitations applied to medical/surgical benefits. This second method is
not found in the MHPAEA.

Having reviewed the nonquantitative treatment limitations, it appears the intent of the interim
final regulation is the elimination of the stand-alone behavioral health carve-outs. This is not in
accordance with the MHPAEA statute and appears to be a violation of anti-trust regulations.

Medical Management Standards (Utilization Review)

Behavioral health carve-outs must be allowed to use specialized guidelines for a
precertification and managed care process. There are inherent differences between behavioral
and general medical conditions. Behavioral health benefits are more prone for abuse in terms of
elective care. Medical/surgical providers recommend far fewer services that are elective in
nature, People seek to continue supportive behavioral health care long after active treatment has
returned them to their normal level of functioning. Indeed, BHS has seen many treatment plans
where the primary or only treatment goal is to “raise self-esteem.” No health plan should have to
pay for such elective services! However, the interim final regulation potentially limits the plan’s
ability to manage such services through utilization review. A plan beneficiary could argue that
because the medical plan administrator does not perform utilization review of outpatient
medical/surgical services, the behavioral health administrator may not do so. The medical plan
administrator does not need to review outpatient services since they, unlike behavioral health
services, are seldom elective.

In analyzing the economic impact of the interim final regulation, the Departments extol the ability
of managed behavioral health organizations “...through their specialized expertise in the
treatment of mental and addictive disorders and organized specialty networks of providers...” to
contain costs while attaining an increased utilization rate for mental health care. The
Departments cite the OPM which encouraged use of behavioral health carve-outs for the FEHBP
because of the carve-outs’ ability to use utilization management to control utilization and
spending. The carve-outs succeed in controlling costs through ensuring access to medically
necessary care at the least restrictive level of care, without artificial plan limitations. The
Departments themselves note “parity in a world dominated by behavioral carve-outs has meant


increased utilization rates, reduced provider fees, reduced rates of hospitalization and fewer very
long episodes of outpatient care. Intensive treatment was more closely aligned with higher levels
of severity.” Yet the interim final regulation seems to impede the behavioral carve-outs from
performing utilization review any differently from medical/surgical plan administrators, thereby
eliminating all the advantages otherwise to be gained from using behavioral carve-outs.

Provider Admission to Participate in a Network

If not eliminated, the Departments must clarify this nonquantitative treatment limitation to
ensure that (1) behavioral preferred provider networks are allowed to limit th
to behavioral health specialists, and (2) plans may require that members obtain behavioral
health services through a behavioral health specialist. BHS supports the position that
behavioral conditions should be treated by behavioral specialists. The Departments acknowledge
that “a shift in source of treatment from primary care physicians to mental health professionals
could lead to more appropriate care, and thus, better health outcomes.” Without clarification,
more persons will revert to obtaining treatment through primary care and other non-specialty
providers who are not trained in psychotropic medications, with a resulting decrease in outcomes.

Provider Reimbursement Rates

The interim final rule introduced a nonquantitative treatment limitation on plans’ calculation of
usual, customary and reasonable rates. In the final rule, the Departments must consider that
there cannot be usual, customary and reasonable rate parity when medical/surgical and
behavioral health have different procedure codes, services, and provider types/specialties,

The final rule must also acknowledge that both medical/surgical and behavioral health
preferred provider organizations negotiate contractual rates for network providers, and
that these negotiated rates are confidential. Confidential contractual negotiations cannot be
examined on a parity basis.

Fail-First Policies or Step Therapy Protocols

The final rule must confirm that this limitation, if not eliminated, does not disallow the use
of valid criteria to determine the appropriate level of care. For example, the American
Society of Addiction Medicine’s Patient Placement Criteria is widely recognized and used as the
guideline for patient placement, continued stay and discharge for patients with alcohol and other
drug abuse problems. The Departments must clarify this proposed nonquantitative treatment
limitation to allow application of ASAM and similar criteria to determine the least restrictive
level of care. Otherwise, plans may be forced to pay for extended stays in “boutique” residential
facilities when the appropriate level of care is an intensive outpatient program.

Conditioning Benefits on Completion of Treatment
The interim final rule prohibits conditioning benefits on completion of a prior course of
treatment. In particular, the rule, by requiring continued coverage of substance abuse
treatment following successive relapses, actually empowers the user and promotes
recidivism. It is a BHS goal to ensure the effectiveness of benefit dollars spent by discouraging
recidivism, Non-compliance with the prescribed post-discharge aftercare treatment plan is the
most common and prevalent factor asso ciated with recidivism. Individuals diagnosed with
substance abuse or a serious mental illness are likely to be the least compliant with the treatment
regimen, BHS has implemented several methods of reducing recidivism, including:
e Required participation in an aftercare program of up to two years duration following
active treatment.
e Frequent contact with the patient and family to provide support and promote the patient’s
participation in the prescribed aftercare program.